Frankel says the bailouts have been successful in their primary goal, which was to prevent the immediate onset of Great Depression 2. I agree strongly. He says "helping some undeserving financiers would be an undesirable but necessary side-effect." Also true, but there's much reason to believe that the bailout architects weren't aggressively trying to minimize the side effect (cf. enormous amounts of econoblogging on parameters of a good bailout from Fall 2008). The governments need the money, a (small) transactions tax raises it from the right people, and there's activity of dubious social utility that would be driven down towards optimal levels with the addition of a little friction.

Menzie Chinn and Jeffry Frieden on How We Got Here. "[W]e view the current episode as a replay of past debt crises, driven by profligate fiscal policies, but made much more virulent by a combination of high leverage, financial innovation, and regulatory disarmament. In this environment, speculation and outright criminal activities thrived; but those are exacerbating, rather than causal, factors." I'm not convinced that innovation, speculation, deregulation, and criminality aren't causal, but there's plenty of blame to go around.

Final program stats show a big car-for-truck substitution in CARS trade-ins, and pretty solid fuel economy improvements despite weak program design; also reports some effects of the program as macro stimulus.

Proposed: just over an hour from London to Manchester, just over 2 to Edinburgh and Glasgow via a proposed high-speed line. A catch is the laughable schedule, aiming to have the London-Birmingham segment complete by 2020.

by Michael Bar, San Francisco State University and Oksana Leukhina, University of North Carolina at Chapel Hill.

Estimates effects of tax law changes on labor force participation for married couples; the average effect is reportedly small, though there is a large effect for spouses of high-earners. Conversely, the Earned Income Tax Credit discourages LFP by spouses of low-earning men.

Back in 2005, I argued at Old Marginal Utility that “Greenspan exceptionalism” was not very well founded in that observers rarely engaged in a proper counterfactual analysis of how well Alan Greenspan performed relative to the next best monetary policy technocrat. That’s a fairly stringent evaluation criterion, and even Brad DeLong’s glass-half-full response revealed what could be considered major errors in Greenspan’s judgment. 2009 hindsight of course shows that there was another major error in inflating the housing bubble, failing to recognize it, and allowing his Rand discipleship to overcome common sense in using Fed powers even to skim the froth.

Now some elite opinion favors Ben Bernanke’s reappointment, but politicians are irritated over Fed stonewalling of bailout oversight and others (e.g. Dean Baker) point out that Ben Bernanke who put the Fed throttles to the firewall to save the world is also the Ben Bernanke who carried over Greenspan policy until it was too late among other things.

So what should the counterfactual-based evaluation of Bernanke say? What would the hypothetical panel of smart graduate students have done? It seems even harder to suggest that Bernanke was essential than Greenspan — in this case, because well-read economists should have had it from Ben Bernanke the academician that in a depression-level crisis you don’t skimp on the monetary policy intervention. Meanwhile, Bernanke gets no points for prescient instincts as the save-the-world interventions have seemed to be firmly of the close-the-barn-doors-after-the-horses-have-bolted variety.

Meanwhile, significant elements like the opaque lending programs have the appearance if not reality of being in part the predator state (a la Jamie Galbraith) in action. There’s a line of ‘b-b-but Bernanke and Paulson saved the world’ opinion along the lines of this bit of fail from the often incisive Joe Nocera:

So why the anger? Why the suggestions of “cover-up” and “lies”? On Thursday, as I watched Mr. Paulson being castigated, it dawned on me. Seven months later, with the palpable fear of a financial collapse largely subsided, it really all boils down to how you view what happened last year. Was it, as Mr. Towns believes, a bailout of a handful of unworthy but too-big-to-fail institutions? Or was it, in the eyes of Mr. Paulson, a rescue of a teetering financial system? My vote is for the latter.

To which the obvious response is, duh, who says it has to be one or the other? A reality-based critique of the bailouts allows them to be both effective at saving the world and unconscionable screw-jobs that kept an array of bad actors from paying for their greed and incompetence. (The latter clearly feeds a lot of the underlying sentiment of the tea partiers, even if it’s ultimately the greedy and incompetent who are marshalling it.) However, considering Team Obama’s political tone-deafness, it’ll be a pleasant but major surprise if they let Bernanke go back to Princeton for some R&R.